Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Hingham Institution for Savings (NASDAQ:HIFS) is about to go ex-dividend in just three days. Investors can purchase shares before the 31st of December in order to be eligible for this dividend, which will be paid on the 13th of January.
Hingham Institution for Savings's next dividend payment will be US$1.17 per share, and in the last 12 months, the company paid a total of US$2.40 per share. Based on the last year's worth of payments, Hingham Institution for Savings has a trailing yield of 1.1% on the current stock price of $216.15. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Hingham Institution for Savings has a low and conservative payout ratio of just 8.1% of its income after tax.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Hingham Institution for Savings's earnings per share have risen 15% per annum over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Hingham Institution for Savings has delivered 7.6% dividend growth per year on average over the past 10 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Should investors buy Hingham Institution for Savings for the upcoming dividend? Companies like Hingham Institution for Savings that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. In summary, Hingham Institution for Savings appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
In light of that, while Hingham Institution for Savings has an appealing dividend, it's worth knowing the risks involved with this stock. For example - Hingham Institution for Savings has 1 warning sign we think you should be aware of.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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